Gov. David Ige signed a transfer agreement today allowing Kaiser Permanente Hawaii to assume control of three financially-struggling Maui County public hospitals.
The deal will save the state, which heavily subsidizes Maui Memorial Medical Center, Kula Hospital and Lanai Community Hospital, an estimated $260 million over 10 years, Ige said at a news conference today.
Kaiser, the state’s largest health-maintenance organization, has committed to infusing $30 million into the hospitals through a revolving credit line and roughly half of the $110 million in capital improvements projected through 2025. The HMO also will spend at least $20 million to update the hospitals information technology systems, including electronic medical records.
State officials said they couldn’t put a price on deal since the lease and collective bargaining agreements have yet to be negotiated.
Kaiser, both a health insurer and medical provider, said the facilities will remain community hospitals open to patients with all types of insurance plans, including rival Hawaii Medical Service Association. However, the deal opens the way for Kaiser to gain a substantial number of new members since Maui Memorial is the only acute-care hospital in the region. Kaiser currently has more than 243,000 members in Hawaii, including over 55,000 on Maui.
Ige signed a law last year authorizing Hawaii Health Systems Corp., parent company of the Maui hospitals, to transfer its facilities to a new entity to mitigate budget deficits that were threatening services and jobs. The Maui region was initially facing a $28 million deficit for the current fiscal year.
The state will now begin lease negotiations with Kaiser, which also must come to a collective bargaining agreement with the public workers’ union representing roughly 1,500 workers. The deal is expected to close on June 30. Kaiser will begin operations on July 1.